Sunday, January 25, 2009

Pop quiz on tax law for Secretary-designate Geithner and Chairman Rangel

Dear Secretary-designate Geithner and Chairman Rangel:

My Volunteer Income Tax Assistance (VITA) students at Union College have been taking the IRS certification tests this month. They are a terrific group and I'm very proud of them.

The IRS certification tests are required of all VITA volunteers, but anyone with Internet access can try taking the tests on their own. You might find it useful to test your own knowledge of basic tax law that applies to ordinary working families and senior citizens.

Taking the tests might help you improve the accuracy on your own tax returns,and, more importantly, it would give you a better idea of the complexity tax policymakers such as yourselves create for ordinary Americans.

When I first agreed to take over the supervision of the Union College/Schenectady County Department of Social Services VITA site four years ago, I naively thought, "Well, how complicated could taxes for low-income wage-earners be, anyway. They probably just file one of those half-page short-form 1040-EZ's, right?"

I quickly learned that the reality is very different. A typical client at our site might be a single parent with a full-time job paying a little above minimum wage and a couple of children. Even though very few of our clients itemize deductions, such a client would still leave our site with about 8 pages of Federal tax forms, filled with dense boiler-plate text. The instructions explaining these forms add up to scores of pages.

My students and I do our very best to walk our clients line-by-line through their tax returns, so they understand the documents we are asking them to sign, but there's a lot you could do to make tax law simpler, as the National Taxpayer Advocate recently pointed out.

It seems to me that it would be useful for all people who make and enforce tax policy to have some acquaintance with this law, and the two of you would be a good place to start.

You can find the basic test in the link at the bottom of the list on this this website, and after you pass the basic test, you can advance to higher levels.

The tests are open book and unlimited time. You are welcome to use tax software and I'm sure that a nearby VITA coordinator would be happy to set up a username for you so you could use the training version of TaxWise to assist you in taking the test. I have posted links to useful study tips and references for the tests here and here.

After you take the test yourselves, you might want to ask the auditor and IRS attorney involved in this tax court case to take the test as well.

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